Google Cost Cuts Take The Company Away From Its Engineers (GOOG)

Google was never quite the engineer company its public relations and human resources teams made it out to be, but as Google gets serious about cutting costs, that myth of a decentralized company run by its engineers -- which was, in fact, more true at Google than most anywhere else -- grows ever fainter.

For example, remember Google's 20% rule? The one that allowed engineers to spend a fifth of their time on any project of their choosing?

"We have to behave as though we don't know" what's going to happen, says Google Chief Executive Eric Schmidt. The company will curtail the "dark matter," he says, projects that "haven't really caught on" and "aren't really that exciting." He says the company is "not going to give" an engineer 20 people to work with on certain experimental projects anymore. "When the cycle comes back," he says, "we will be able to fund his brilliant vision."

Google's (GOOG) finally getting smart about allocating human resources and capital. Here's what that means in the short term:

A sense of urgency about diversifying the business, which means new priorities include display ads, mobile ads and enterprise software.

Non-revenue generating products will starve if they're not killed altogether. Project the company is just "fiddling with," Schmidt told the WSJ will get "will get "naturally smaller as people get plucked off."

Reigning confusion. One Google current operations manager told the Journal: "It's not exactly clear where that bottom line is now. I don't think they know that either."

Dispirited engineers. Google no longer belongs to the dreamy engineers and it's going to make them feel bad. Quoth the Journal: "Some engineers complain they can no longer tap the employees and machines they need to develop their ideas. This is no small issue among elite programmers, many of whom joined the company for the chance to work on such projects, according to current and former employees."